Elan comes under new ownership, joins Linear

The company expects to gain from synergies between Linear and its parent, Nortek
Saturday, March 1, 2003

LEXINGTON, Ky. - Eight years after being taken private by a management led buyout, Elan Home Systems is now under new ownership.

Linear Corp., which offers complementary security and home automation products under the Linear, Xantech and Multiplex name, bought the company for an undisclosed sum in an acquisition that closed Jan. 17.

“We’ve been aware and talking with Elan for a number of years,” said Grant Rummel, president of Linear Corp. “We’ve always recognized that they have a very high growth rate and they’ve been very successful in whole house music systems or whole house entertainment systems.”

Elan, said Rummel, is a good fit on a number of fronts, such as technology and manufacturing. He expects to shift Elan’s manufacturing, a job currently out-sourced, into a facility owned by either Linear Corp. or its parent company, Nortek, a building and indoor environmental controls company based in Providence, R.I.

Carlsbad, Calif.-based Linear Corp. is one of 28 subsidiaries owned by Nortek, which offers products such as windows and doors, heating and air conditioning and vinyl products.

According to Rummel, Nortek’s strategy is to buy good operating companies with a similar focus.

For Elan, the acquisition provides it with access to more capital to fuel continued growth. In seven years, while owned by investment firm Montgomery & Shelton and Elan President Bob Farinelli and Vice President Paul Starkey, the now 75-employee company grew by 600 percent, said Rick Gratz, communications manager for Elan.

“We need to take the company to the next level,” said Gratz. “Nortek is a billion dollar multi-national company and we’re going to be investing in more engineers, product research and development.”

Farinelli said Elan had been looking for a partner for several years since its outside investors had a timeline to stay onboard. “They wanted to move on and we wanted to move forward,” he said.

After looking at a half dozen companies, Elan went with Nortek, which has made several acquisitions over the past 10 years in the home automation and controls market. It acquired security product manufacturer Linear Corp. in 1987 and later rolled in companies such as Multiplex Technologies and Xantech in 1999.

Multiplex, a provider of structured wiring solutions for the home and video products is now in the process of combining its Brea, Calif., facilities with Linears’. That move, which is expected to happen by April, will eliminate duplicate functions. Xantech is a home systems company.

Together, the companies bring a nearly whole house solution, from structured wiring and home automation products to security and life safety.

“We have complementary product lines and similar mission statements,” said Farinelli. “With the three businesses together, there’s opportunity for synergies.”

Plans call for Elan to tap into the engineering expertise of its new parent company, enabling it to bring new products to market more quickly. It intends to expand systems integration capabilities, enabling items such as audio, video, security, lighting, air conditioning and heating to all work from one system. Farinelli and Starkey will also remain with the company.

“This market is still in its infancy,” said Gratz. “It has incredible room to grow.”